Jefferies has downgraded BSE Ltd. (Bombay Stock Exchange) to “Underperform,” despite raising the target price from Rs 2,850 to Rs 3,500. This mixed assessment comes on the back of significant market activity following the Securities and Exchange Board of India’s (SEBI) new framework for Futures and Options (F&O) trading.
The BSE stock has more than doubled in value since the SEBI announcement, driven by investor expectations of substantial market share gains. Jefferies’ analysis suggests that assuming a 25% hit to overall market volumes, BSE’s valuation at a price-to-earnings ratio of 40x for the fiscal year 2026 implies its market share will increase dramatically from 13% in the second quarter of 2025 to between 30% and 35%, with a particularly strong 40% to 50% share in weekly contracts.
However, Jefferies expressed concerns that these optimistic projections may be overstretched and do not adequately factor in potential risks. These include a higher-than-expected impact on overall market volumes, minimal spillover gains, and the possibility of further regulatory changes.
In light of these factors, Jefferies views the near-term risk-reward profile for BSE as unfavorable, leading to the decision to downgrade the stock while still acknowledging a higher target price.
